UK consumer credit drops

City A.M. Reporter
Unsecured lending to Britain's consumers posted its sharpest drop since at least 1993 in December, official data showed on Tuesday, highlighting their reluctance to take on more debt.

Britons have been reluctant to take on more credit for major purchases, as bank lending conditions are tight and uncertainty over jobs is weighing on sentiment, making weak consumption the main drag on the fragile economy.

Consumer credit fell by £0.4bn in December, Bank of England data showed, confounding forecasts for a £0.4bn rise.

Mortgage lending rose by £0.7bn in line with forecasts.

The Bank of England said mortgage approvals numbered 52,939 in December, the highest since December 2009. However, the improvement remains slow, providing little hope for a near-term rebound in the sluggish British housing market. Analysts had forecast a reading of 53,700.

Before the 2008 financial crisis, monthly mortgage approvals ran at around 90,000, but the number of home sales has slumped since then and the property market has ceased to be a major driver of consumer spending.